Financial Literacy to Financial Intelligence: Making Your Business Stronger - FINANCIAL-24
How did you feel when you walked into your business this morning? Did your employees appear to be engaged or simply doing their jobs? As the leader of your company, how do you encourage workers who have the skill sets and appropriate attitudes to perform at the top level of their abilities? According to legendary management consultant Peter Drucker, you focus on developing financial literacy throughout the company.
Measuring company success. Financial statements report the financial position of the company. Most will agree that sounds fairly simple and straightforward. However, asking someone uninitiated in accounting practices to process an income statement, balance sheet, and cash flow statement frequently produces bewilderment and some embarrassment. Explaining these basic reports in detail to your employees helps them achieve financial literacy. Now, not only do they understand the many elements involved in measuring how well the company is doing, they begin to see how their position impacts the entire company.
In The Practice of Management, Drucker had this to say about the importance of providing company financial information to the worker, “…if [the worker] lacks information, he will lack both incentive and means to improve his performance.”
Benefits of getting on the same financial page. Once your employees feel they are essential to company success, they commit themselves to focusing on their own areas of improvement without being instructed to do so. This represents the transition from financial literacy to financial intelligence, which is the ability to think independently in the context of increasing the bottom line. Everyone begins their workday with no ambiguity, and decision-making becomes easier and faster.
Ideally, your employees will gain the four skill sets that define financial intelligence:
Understanding the basic reports. These are represented by the income statement, balance sheet, and cash flow statement.
Understanding the art of finance. Not everything is quantifiable, therefore accountants determine how the numbers are best interpreted to produce the most accurate financial picture of the company.
Understanding analysis. Each department undertakes an in-depth look at the numbers where their performance has the greatest impact. Knowing why a manager raises concerns in a specific area based on deeper analysis helps bring about a collective commitment within the department to address the situation.
Understanding the big picture. The success of the company is ultimately viewed within the context of the big picture, which includes the economy, rules and regulations, changes in technology, and competitive environment.
Learning to speak the language of finance makes your workers feel more business oriented and confident. Being able to communicate effectively and be taken seriously is a benefit no employee-of-the-month award will ever touch. Being fully staffed by focused, confident professionals also reflects well on their leader.
The size of your business is immaterial to the effectiveness of implementing this program. According to Karen Berman, founder of Business Literacy Institute, information sharing and financial understanding on the part of employees and managers positively affects the company’s financial performance.
This is the article Financial Literacy to Financial Intelligence: Making Your Business Stronger - FINANCIAL-24 this time, hopefully can benefit for you all. well, see you in other article post.
Title : Financial Literacy to Financial Intelligence: Making Your Business Stronger - FINANCIAL-24
link : Financial Literacy to Financial Intelligence: Making Your Business Stronger - FINANCIAL-24
0 Response to "Financial Literacy to Financial Intelligence: Making Your Business Stronger - FINANCIAL-24"
Post a Comment